Why it matters: California employers, take note: the refusal to reimburse a low-wage employee for costs associated with using his vehicle on the job can support a constructive discharge claim. Jorge Vasquez was paid $10 per hour but alleged that when the cost of gas and maintenance for his car – which he said he drove at least 30 miles per day for work purposes – was factored in, he was paid less than minimum wage. Unable to afford the upkeep, he quit and sued his employer. A California Court of Appeal reversed dismissal of the suit, concluding that Vasquez’s claims were sufficient to support a claim for constructive discharge in violation of public policy.

Detailed Discussion

As a maintenance technician for Franklin Management Real Estate Fund, Jorge Vasquez claimed that he was instructed by his supervisors to drive his own truck for work-related errands, like going to the hardware store to buy items needed for the apartments owned or managed by his employer.

Vasquez estimated that he drove a minimum of 30 miles each day running such errands and repeatedly requested that he be reimbursed for gas and vehicle maintenance. The employer refused. At a rate of 55 cents per mile, Vasquez estimated that he should have been reimbursed $330 each month – a significant portion of his $1,600 monthly salary. When factored into his salary of $10 per hour, Vasquez claimed he had “no choice to resign,” as he was unable to afford the costs related to the job.

Franklin Management moved to dismiss Vasquez’s suit, arguing that the failure to reimburse for mileage was not sufficiently intolerable or aggravated to support a claim of constructive discharge.

But the court disagreed, reversing a demurrer for the employer. Although deprivations of salary or other economic benefits generally do not support a constructive discharge claim, the plaintiff was “in an untenable position,” the panel said.

Vasquez “alleged not only that [Franklin Management] violated the Labor Code by failing to reimburse for mileage, but that the duties [the employer] assigned required such extensive driving that the reimbursement to which he was entitled represented a significant percentage of his already low salary,” the court wrote. “Forced to divert so much of his salary to gasoline and vehicle maintenance, he was unable to pay basic living expenses.”

In a footnote, the court calculated that Vasquez earned $7.9375 per hour, less than the minimum wage of $8 per hour in force at the time of his employment ($80 per day, with vehicle expenses of $16.50 per day based on a rate of 55 cents per mile, leaving $63.50).

In addition to the daily costs, Vasquez “was wearing out the very vehicle he needed to maintain his livelihood, either by retaining his employment with [Franklin Management] or finding another job,” the court said. “Had he continued, he would soon have found himself with no job and no vehicle.”

California recognizes timely payment of employee wage claims to be an important part of public welfare, the panel added, and to the extent Vasquez’s claims were based on Franklin Management’s failure to pay him the minimum wage, sufficiently stated a claim for violation of public policy.

The opinion wasn’t a total victory for Vasquez, however, as the court affirmed the demurrer to his cause of action for intentional infliction of emotional distress.

To read the opinion in Vasquez v. Franklin Management Real Estate Fund, click here